Egypt's economy contracted 7 per cent in the first quarter of 2011, Finance Minister Samir Radwan told Egyptian television channel ONTV in an interview on Tuesday night.

"The economy posted negative growth of 7 per cent," said Radwan in an interview with talkshow host Yosri Fouda.

Radwan also downgraded his growth expectations for the fiscal year that ends in June. "If Egypt achieves 2 per cent growth I'll be happy," he said.

The International Monetary Fund (IMF) last week predicted that Egypt's growth would stand at 1 per cent for 2011.

The minister also defended his attempts to secure loans from international financial institutions during a recent visit to Washington DC to attend World Bank and IMF spring meetings.

An agreement reached with the IMF permits Egypt to borrow US$2.2 billion.

"The conditions [of the loan] don't harm the country's sovereignty nor its pride," said Radwan. "We need $2 billion till the end of June 2011 to cover wheat and sugar local demand."

Egypt, a heavy importer of food and staples, is suffering from soaring world food prices and the country's dollar reserves are running low. However, Radwan said that revenues from the Suez Canal -- stable at $5 billion -- are slightly easing pressures.

That may be one of the few scraps of good news, according to his summary.

"Exports decreased by 40 per cent and tourism used to bring in about $1 billion a month -- that's gone. International reserves dropped from $43 billion to some $30 billion," Radwan told ONTV, adding that Egypt's official international reserves are enough to cover 5.6 months of imports.

He also said that the US refused Egypt's request to cancel its debts due to disagreements between Congress and the Obama administration.

"Instead of debt relief, they accepted the idea of debt swap for investment. For us, both have the same effect".

Under this programme, instead of Egypt paying back an installment, the sum could be redirected to investing in the country, particularly in infrastructure. This transaction would be in Egyptian pounds, relieving pressure on foreign exchange.

Egypt has a total foreign debt of $34 billion. Every year one billion dollars go to the European Union to pay annual debt service -- interest plus installment -- and $350 million to the US.